Microsoft Begins Examining Yahoo For a Potential Bid

Microsoft Corp. (NASDAQ:MSFT) has officially shown interest in bidding for Yahoo Inc. (NASDAQ:YHOO), with the world’s largest software giant signing a non-disclosure agreement to scrutinize the finances of Yahoo.

In order to say that get better access to the financial condition of Yahoo and show that it is interested in acquiring Yahoo, Microsoft agreed to the agreement sometime last week, according to an unknown source with knowledge of the ongoing proceedings. The agreement has not yet been publicly announced and it is uncertain whether Microsoft is going to bid for Yahoo or not.

After firing its Chief Executive Officer, Carol Bartz in September, the board is in the process of seeking out future options for the company. The alternatives include getting rid of Asian assets belonging to Yahoo’s in the form of a stake in Aliababa and others. Other options being considered are to action of the company compete or form partnership with another company. The company has not yet hired a new CEO, with the Chief Financial Officer, Tim Morse acting as the interim CEO.

A meeting is scheduled for next week to come to a decision for Yahoo’s future. The entire board is set to meet and each member is set to vote for what is the best alternative for the internet giant.

Microsoft has earlier unsuccessfully attempted to acquire Yahoo for $47.5 billion in 2008. However the board of Yahoo decided to reject the bid offer and let go of Microsoft. However today the stock prices of Yahoo have dwindled by more than half and a bid by Microsoft will cost half as much as it cost before.

Other potential bidders include China’s Alibaba, which is seriously considering acquiring Yahoo, which owns a considerable share of the Chinese company. A few private equity firms are also in the race to acquire Yahoo and take in private, which could avoid any hostile bidding attempts by its rivals.

Microsoft is aiming to acquire Yahoo in the hopes of preserving its business relationships. Microsoft has formed an advertising alliance with Yahoo and also powers Yahoo search with its Bing search engine technology. If the new owner of Yahoo attempts an reorganization, it is possible that Microsoft will lose its business.

The shares of Yahoo fell by 4 cents on the New York Stock Exchange on Wednesday, after the news about the deal with Microsoft was made public.

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Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.